Public Bill Committee

[Mr. Roger Gale in the Chair]

Roger Gale: Good morning. Before we begin, there are various preliminary announcements to make. First, while I am in the Chair, if hon. Members wish to remove their jackets for their comfort they may do so. It is up to Mr. Benton whether he extends the same courtesy. Will all hon. Members please ensure that their mobile phones, pagers and all electronic devices are switched off? For the purposes of this Committee, laptops are not allowed to be used.
There is a money resolution in connection with the Bill and I am advised that copies are available in the room. Adequate notice should be given for amendments, because, as a general rule, Mr. Benton and I will not call starred amendments.
The process of taking evidence in public that we are shortly to embark on is relatively new, so it may be helpful to hon. Members, as it has been to me, to be advised as to the procedure. The Committee will first consider the programme motion on the amendment paper. That process will take up to half an hour. We shall proceed to a motion to report written evidence, followed by a motion to permit the Committee to deliberate in private in advance of the oral evidence sessions. I would like to think that we could take those latter two motions formally.
Assuming that the second of the motions has been agreed to, the Committee will move into private session for discussion prior to the evidence taking. Once the Committee has deliberated, the witnesses and members of the public will be invited into the room and the oral evidence session will commence.
To concentrate minds, the witnesses have been invited to attend at 11 o’clock. That means that you have half an hour, but if you choose not to take it, it will help the witnesses. If the Committee agrees to the programme motion, it will hear all evidence today and on Thursday, moving on to the more familiar proceedings of clause-by-clause scrutiny as a Public Bill Committee in sittings commencing in the new year.
You will notice that the first evidence session, when we come to it, will be with the Local Government Association and London Councils. That session must terminate at 11.45 am under the terms of the programme motion, if you agree to it; so the witnesses do not have very long. Regrettable and discourteous though it may seem to some people, at 11.45 am the Chair must terminate the evidence session. You should be aware of that when we come to take the evidence.
Without further ado, I call upon the Minister to move the programme motion.

Iain Wright: I beg to move,
That—
(1) the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday 11th December) meet—
(a) at 4.00 p.m. on Tuesday 11th December;
(b) at 9.00 a.m. and 1.00 p.m. on Thursday 13th December;
(c) at 9.00 a.m. and 1.00 p.m. on Thursday 10th January;
(d) at 10.30 a.m. and 4.00 p.m. on Tuesday 15th January;
(e) at 9.00 a.m. and 1.00 p.m. on Thursday 17th January;
(f) at 10.30 a.m. and 4.00 p.m. on Tuesday 22nd January;
(g) at 9.00 a.m. and 1.00 p.m. on Thursday 24th January;
(h) at 10.30 a.m. and 4.00 p.m. on Tuesday 29th January;
(i) at 9.00 a.m. and 1.00 p.m. on Thursday 31st January;
(2) the Committee shall hear oral evidence in accordance with the following Table;

Date

Time

Witness
Tuesday 11th December
Until no later than 11.45 a.m.
Local Government Association;
London Councils
Tuesday 11th December
Until no later than 12.30 p.m.
Chartered Institute of Housing
Tuesday 11th December
Until no later than 4.45 p.m.
National Housing Federation
Tuesday 11th December
Until no later than 5.30 p.m.
Defend Council Housing
Tuesday 11th December
Until no later than 6.15 p.m.
Tenants and Residents Organisations of England
Tuesday 11th December
Until no later than 7.00 p.m.
Council of Mortgage Lenders
Thursday 13th December
Until no later than 9.40 a.m.
Campaign to Protect Rural England
Thursday 13th December
Until no later than 10.25 a.m.
Tribal Treasury Services
Thursday 13thDecember
Until no later than 1.45 p.m.
Shelter
Thursday 13th December
Until no later than 2.30 p.m.
Lord Best
Thursday 13thDecember
Until no later than 4.00 p.m.
Department for Communities and Local Government
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clause 1; Schedule 1; Clauses 2 to 9; Schedule 2; Clauses 10 and 11; Schedule 3; Clause 12; Schedule 4; Clauses 13 to 52; Schedule 5; Clause 53; Schedule 6; Clauses 54 to 57; Clauses 59 and 60; new Clauses and new Schedules relating to Part 1; Clauses 242 to 248; Schedule 8; Clauses 249 to 267; Schedule 9; Clauses 268 to 273; new Clauses and new Schedules relating to Part 3; Clauses 61 to 241; new Clauses and new Schedules relating to Part 2; Clause 274; Clause 58; Schedule 7; Clause 275; Schedule 10; Clauses 276 to 280; remaining new Clauses; remaining new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 4.00 p.m. on Thursday 31st January.
It is a privilege to serve yet again under your chairmanship, Mr. Gale. I say “yet again”, because the first Bill Committee on which I served was that on the Gambling Bill, which was splendidly chaired by your good self. You also chaired the previous Session’s Finance Bill Committee, on which I served. Mr. Gale, I do not know what heinous crimes you have committed that cause me to follow you about, but, for my part, I am absolutely delighted that your decisive and wise chairmanship will help us enormously during the Committee’s deliberations.
I also welcome your co-Chair, Mr. Benton, whose constituency I was privileged to visit last week, and whose chairmanship I also respect. I welcome all other right hon. Members and hon. Members to the Committee. I would imagine that occasionally some hon. Members have to be, shall we say, persuaded by the Whips to serve on a Public Bill Committee, but for this Bill my party has been fighting them off, as we have been over-subscribed by those wishing to participate. We had an excellent debate on Second Reading and I look forward to expanding on and developing some of the arguments that were teased out.
With some trepidation, I welcome to the membership of the Committee my right hon. Friend the Member for Greenwich and Woolwich and the right hon. Member for North-West Hampshire, who is not present this morning. Their experience as former Housing Ministers is second to none. I am filled with a great deal of trepidation precisely because of their first-class knowledge and experience in the field. I am certain that they will ensure that I raise my game during the Committee. I also thank and welcome the Front-Bench spokesmen of the Opposition parties, the hon. Members for Welwyn Hatfield, for North-East Bedfordshire and for Chesterfield. I like and respect the hon. Gentlemen enormously. I invariably disagree with them, but know that they will scrutinise the Bill with the rigour that it deserves.
I mentioned on Second Reading that the Bill is wide-ranging and detailed; ambitious and yet technical. It is an important vehicle to enable our vision to be realised of more homes, better homes, and greener and more sustainable homes. The creation of the Homes and Communities Agency will bring together land and investment to facilitate the building of new homes with a view to helping us to reach the target of 3 million new homes by 2020. The establishment of the new regulator, Oftenant, will ensure that tenants of social housing get the very best that they deserve in core housing services.
We have a good and diverse range of witnesses for the Committee sittings today and on Thursday. The usual channels have worked extremely well to ensure a good balance, and the Committee will be able to hear and probe different views and perspectives on housing, regulation and regeneration. Once we have taken oral evidence, the programme motion provides for 14 sittings for detailed clause-by-clause consideration. I am keen to work with the Opposition parties on particular parts of the Bill on which they wish to concentrate, so that they have the ability to express appropriately their concerns. I am content that the 14 sittings within the programme motion will allow that to happen. The usual channels have ensured that the programme motion is accepted by all, so it remains for me only to ask the Committee to support it.

Question put and agreed to.

Ordered,
That, subject to the discretion of the Chairman, any written evidence received by the Committee shall be reported to the House for publication.—[Mr. Iain Wright.]

Roger Gale: Copies of any memorandums that the Committee receives will be made available in the Committee Room.

Ordered,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—[Mr. Iain Wright.]

Committee deliberated in private.

On resuming—

Written evidence to be reported to the House

H&R 03 Local Government Association
H&R 06 London Councils

Roger Gale: Good morning, ladies and gentlemen, and welcome to the first evidence session for the Housing and Regeneration Bill. I will open with an apology: normally, I would stand to welcome you, but technology apparently dictates that Members and witnesses must remain seated so as not to go off the microphone, which makes life difficult for the Official Report. For that, I apologise. This morning we will hear evidence from representatives of the Local Government Association and London Councils. Thank you for joining us and please be kind enough to identify yourselves.

Sir Simon Milton:   I am Simon Milton, the chairman of the Local Government Association.

Nick Day:   I am Nick Day, head of housing strategy and sub-regions of London Councils.

Roger Gale: Mr. Day, I have been asked to ask our witnesses to speak up for the benefit of the Official Report, so perhaps you could do so. I heard you, but it was a little sotto voce.
Before calling a Member to ask the first questions, I remind all Members that they must limit their questions to matters that are within the scope of the Bill. I am afraid that I have to caution the witnesses that, under the terms of the programme motion agreed by the Committee this morning, I have to conclude this session of questioning at 11.45 am precisely, irrespective of the importance of what you are saying or whether you are in mid-sentence. Those are the courtesies under which we operate. Without further ado, Mr. Hurd.

Q 1

Nick Hurd: Good morning. The aim of part 1 of the Bill is to secure an increased supply of housing. In your view, is the creation of a mega-quango the right way of going about it?

Sir Simon Milton:   I think that it certainly would be beneficial to bring together the two roles of the Housing Corporation and English Partnerships, but we do not want to create a sort of behemoth quango that is slow to work on the ground. The view of the Local Government Association is that housing is crucial to creating successful places and that councils are the best placed bodies to deliver strategic housing. They not only have a democratic mandate, and therefore some consent from their communities, but they are best placed to bring together all the different elements to ensure successful and sustainable places, not simply to churn out numbers.

Q 2

Nick Hurd: Thank you for that answer. May I draw you on to the ground of how this new agency will co-operate with other stakeholders, particularly local authorities, because concern has been expressed? The Bill includes the requirement for the HCA to be on the list of partner authorities that have duties to local authorities. In your view is that sufficient to allow it to engage effectively with local authorities?

Sir Simon Milton:   I think that these things are partly about the rules, but they are more importantly about culture and behaviour. You can have a duty to co-operate, which is something that local government requested and is pleased to see on the statute book, but ultimately the proof of the pudding will be how the agency operates day to day. That has to do with relationships, culture and behaviour. That is not something that can be legislated for. Councils are very clear that they wish the agency to be a partner and they do not wish it to seek to dictate, which is one of their concerns, particularly over planning issues.

Nick Day:   I certainly agree with all of that. We are very pleased that the HCA is to be added to the list of partner authorities. I agree that relationships are key. In London there are particular concerns about how the HCA will interact with the Mayor and local authorities. I understand that the HCA will be part of the Mayor’s strategic housing investment panel. Obviously we will want to ensure that regional priorities do not overshadow local priorities. The GLA put forward a proposal that the HCA should be a functional body of the Mayor. We do not support that.

Q 3

Nick Raynsford: In the Second Reading debate the Minister for Housing said:
“the Housing Corporation is tasked to deliver the Mayor’s affordable housing strategy in London and we certainly envisage the Homes and Communities Agency being able to do the same thing.”—[Official Report, 27 November 2007; Vol. 468, c. 152.]
That seems to be a rather different concept from the one you are putting forward.

Nick Day:   Obviously we are in new territory with the Mayor’s housing powers, as far as London is concerned. That is starting to be played out. Local authorities are very much engaged with their local communities. They have a local democratic mandate. We want to ensure that the strength that will bring to developments, to regeneration and to sustainable communities is not lost in the context of a regional focus that loses the link with local communities.

Q 4

Nick Raynsford: But the Mayor has expressed a view that some local authorities in London are not signed up to his strategy. What do you propose should be done to deal with such cases if the power is not available to the HCA that the Minister implies?

Nick Day:   As I say, that is an evolving process that is playing out at the moment. There are obviously negotiations on individual bases that need to take place where there are differences in view between particular local authorities and the Mayor.

Q 5

Nick Hurd: Are you satisfied, Sir Simon, that the Government have consulted adequately on the question of how the HCA will engage with local authorities? Do you believe that the rules of engagement are sufficiently clear today?

Sir Simon Milton:   We have some concerns. Indeed, the LGA will seek to promote an amendment, or further discussion during the passage of the Bill, to clarify the relationship between the Housing and Communities Agency and local councils, specifically over the aspects of the Bill that seek to delegate to the HCA powers to assume control over development and plan-making at local level. The situation is a hangover from the days when we had urban development corporations, which had those powers. There is no doubt that there are some good examples around the country of regeneration carried out by such bodies, but I would like to add two points.
First, councils now are not the same as they were back in the ’80s, when those bodies were set up. I think that councils are now more than capable of fulfilling the strategic planning function in regeneration.
Secondly, if we are to get consent from communities for the type of regeneration we want, it is best done by bodies that have a democratic mandate, so we would wish the HCA to act in support of councils, where asked to. There may be occasions where councils would invite the HCA to take over some of their roles on specific projects, but we would seek, through the Bill, to have that matter clarified and we would like protections to be in place so that councils did not see their powers taken away.
There is a suspicion on the part of some councils that the view will be that if you do not deliver what the Government tell you to deliver on housing numbers your planning powers will be removed and given to the HCA. That would be completely unacceptable to local government as a whole.

Q 6

Andrew Love: I am sorry to come in a little late, but I wanted to pursue Mr. Day about the answer he gave to the previous question. There is a great deal of concern in London that a number of local authorities are not complying with or not living up to the overall plan that the Mayor has laid out about the need for affordable accommodation. I did not think that the answer Mr. Day gave us about the role that London Councils should play in that plan was adequate, so I thought that I would give him a second chance to tell us how we can ensure that all local authorities are playing their part in the overall plan for affordable accommodation in London.

Nick Day:   Within London Councils, there is a range of views that have been expressed about how best to meet London’s housing needs, which obviously are very extensive. We are in the process of introducing a set of housing objectives that flesh out some discussions that have been going on internally. I am not in a position to talk through those at the moment, but that is something we are looking to introduce in the new year. The debate is about trying to find the best ways to meet London’s housing needs and determining what are the most appropriate measures to meet those needs.

Q 7

Nick Hurd: May I take a slightly different angle on this issue? My constituents, in Ruislip-Northwood, are not asking, “Is my local authority complying with the Mayor’s housing targets?” Instead, they are asking, “How on earth do I get my voice heard in this process, where the hierarchy in planning seems to be national planning, the Mayor in some form or other, and then my local authority?” Do you think that the creation of the agency, given where it sits in that hierarchy, simplifies that question in my constituents’ minds, or complicates it further?

Sir Simon Milton:   I suspect that it will make very little difference to the understanding of your constituents, because there will still be a hierarchy and they will probably still feel that the politicians they have elected closest to their locality still do not have complete control of the system. Clearly, there is a national Government policy, for which it is perfectly proper to have regard; in London, there are also regional mayoral policies, and there will also be local authority policies, so it is not surprising if ordinary citizens find that hierarchy confusing.
I would argue, as you would expect, that as the local authority has the closest mandate its voice should therefore be most reflective of what local citizens want and should have particular weight. However, that is clearly a contested view.

Q 8

Andrew Love: Sir Simon has gone on to explain in greater detail, but I was picking up on the idea that only the local views matter. Surely, what we are looking for is a balance. Perhaps Sir Simon could elaborate more clearly on how he thinks the balance between regional and national priorities and local voices should play out.

Sir Simon Milton:   Certainly. If we look at London, as it was the focus of your questions, clearly the Mayor is charged with a London spatial strategy—the London plan, which sets out an aspiration on housing. It is not a firm target because the Mayor does not deliver to the target, but there is an aspiration that councils should seek to achieve 50 per cent. affordable housing on new development. How they go about doing it will vary from council to council. There have been some celebrated spats over that policy between the Mayor and individual councils in the past year and if we examine the detail we find that the local authority is delivering merely to a formula that works best in its local area.
My London authority, Westminster, has one of the largest sites currently coming forward for planning: the site adjacent to Victoria station. You all know it very well; it is not far from here. The developer wants to put in 800 new flats, not a single one of which will be affordable. In this instance, the council says that it wants affordable housing and the Mayor says that is unnecessary. It is not a simple story—that it is always about the Mayor wanting more affordable housing and councils wanting less. The very term “affordable” is defined differently, varying from those, such as my own authority, who have always defined it as being social rented housing, to the London plan, which assumes that it includes social rented, shared ownership, student accommodation and other forms of affordable housing.
It is very easy to over-simplify this debate and miss what is really happening on the ground in different localities.

Q 9

Grant Shapps: On that last point, in one of the clauses the Bill appears to try to redefine social and affordable housing in order to call all affordable housing social housing, thereby massively increasing the stock of social housing. Is that an issue of concern to you, or is it something that you have noted? Do you want that clause of the Bill to be amended?

Sir Simon Milton:   Through you, Chairman, my answer to Mr. Shapps is that what we are all concerned about is numbers on the ground. We can argue over policies and percentages, but if you do not get the homes built it is all a complete waste of time. The issue about affordability always boils down to viability: what you can actually get from a particular site. Developers will always seek solutions that optimise their financial return—quite properly—and councils will always seek to achieve what is in the public good.
There is no doubt that across London there is a need for all forms of housing and, on a site-by-site basis, you have to try to achieve the best outcome you can, which will deliver the maximum number of units, including the maximum number of affordable units. In some areas that will be primarily social; my council has always had a policy that affordable was 25 per cent. but it all had to be social rented. In others, you could have a higher percentage but the number of social rented units does not go up.
Each borough needs to understand what its housing needs are and to be allowed to have a policy that seeks to deliver against those needs within the Mayor’s overall aspiration of 50 per cent. affordable which, by its definition, will have to cover much more than social rented. If you were to define 50 per cent. social rented you would not see development in most of London.

Grant Shapps: I am not clear what you are saying about the Bill in relation to this matter and the HCA. Is your concern that the HCA will help to promote the right agenda as you see it or that it is going in the wrong direction? Can you clarify that for us?

Sir Simon Milton:   Well, the HCA is a delivery agent; it is not there to set strategic housing policy, which, in my view, should be done by local authorities —in London a combination of the Mayor and local authorities. The HCA should do delivery; that is its role.

Roger Gale: Before we leave this line of questioning, Minister, do you wish to make any observations?

Q 10

Iain Wright: May I explore what my hon. Friend the Member for Edmonton has mentioned, which is a fundamental point? It is relevant and pertinent to London, but in the era of multi-area agreements, it is important across the rest of the country as well. Can you envisage circumstances in which the HCA could override the wishes of a local authority in either a London setting or a multi-area agreement setting, where one local authority was perhaps dragging its heels? Are you suggesting that we need to use the lowest possible level, or is it relevant in some circumstances for the agency to override the wishes of a local authority, given a regional market?

Nick Day:   Obviously, there are complex arrangements with regard to larger regeneration schemes and yes, there will be some difficult questions to answer. We have not entirely formed our position on that, but instinctively we would be concerned if there were scope for a local authority’s priorities seemingly to be overridden. I cannot give a categorical answer, because we have not been through that level of detail on the provisions, but we have an instinctive concern, where we see the potential for a local authority to lose some of its discretion in its area.

Sir Simon Milton:   Let me take the example of the multi-area agreements. You painted a scenario in which one authority was seeking to drag its heels. In those circumstances, I would wish to understand why that local authority felt differently from the other local authorities in the agreement and what obstacles and blockages were making it feel that more housing was inappropriate—it would almost certainly be because of a lack of necessary infrastructure in that area. In those circumstances, I would expect the HCA to act positively to remove those blockages to ensure that the money was there for the exit off the motorway, or for the additional schooling or for the things that are needed to make the development work.
As I go across the country—I have been to many councils of all political persuasions—I have not found any lack of appetite for housing or, indeed, any refusal to consider housing. I am seeing frustration at the inability to get all of the bits of the Government puzzle to work together to deliver. Even in Milton Keynes, which, as you will know, is a housing growth area, the chief executive complained to me that the Department for Children, Schools and Families has arbitrarily removed funding that had already been agreed for new schools. Without those new schools, Milton Keynes cannot deliver the additional housing that it wishes to have and for which it has all the other pieces in place. I would expect the HCA to understand such blockages and to act to remove them, rather than arbitrarily telling the council, “Well, we are going to overrule you anyway.”

Roger Gale: Are there any other questions on that issue? Otherwise, Mr. Raynsford, do you wish to come back in?

Q 11

Nick Raynsford: Can we turn to the issue of the new regulator? The LGA’s evidence clearly states that
“council landlords are willing to accept the same responsibilities and scrutiny as other providers. We support the remit of the new social housing regulator...The LGA will support amendments to enable Oftenant to operate domain-wide from its inception.”
Are there areas where you do not feel that it is feasible for the provisions of the Bill to apply to local authorities in the short term, or do you see the Bill as extending to local authorities at the earliest possible opportunity?

Sir Simon Milton:   Our position on Oftenant, if that is to be its name, is that we feel that there should be no difference for a tenant, regardless of who their landlord is. They should be subject to the same forms of regulation, which is why we believe in a common form of regulation across the social rented sector. Since we now have a duty to co-operate on the registered social landlords, which is something that local government asked for, we feel that it is morally right that we should be subject to the same regime as them, rather than expecting to do as we wish and not being subject to the same restrictions. We think that there is an issue of fairness there.
Our main concern is that although the Government accept the argument for common regulation, the risk is that when the new regulator is set up, it will be there to regulate housing associations. A few years down the line, councils will be bolted on, but by that stage the culture of the regulator will already be set, and it will be difficult to change it. There is a risk that we will, in effect, have two tiers operating. That is why we believe that the provisions should be for everyone from the outset. We do not believe that the Government have convincing arguments as to why that should not happen.

Q 12

Nick Raynsford: I agree with that. Indeed, I voiced similar views on Second Reading. However, I asked was whether there was anything within the current formulation of the Bill that you would be uncomfortable with applying to local authorities. Can I press you on that, because I think that there are some difficult issues?

Sir Simon Milton:   I am not aware of any, but if you have spotted something I should have—

Q 13

Nick Raynsford: Let me pursue this. This legislation will give very considerable powers to the regulator to intervene where a body subject to regulation has failed to meet a standard. That standard could include things such as “the extent to which demand is to be supplied”. That sounds to me like the regulator being able to intervene, if an authority fails to provide adequately in terms of output. You can see the point that I am making. We are going back to the earlier discussion about what happens if there is under-provision. Are you happy with that particular power?

Sir Simon Milton:   No, we are not. Let me explain a point that I should have made. We are in an era in which the pattern of the regulation of local authorities is changing. We are moving from comprehensive performance assessment to comprehensive area assessment. Part of the rationale for that is a recognition by Government and local government that there has been too much inspection and regulation. That was costing too much and was getting in the way of delivering good outcomes. We have reached a position where there are 198 performance indicators that we have to be measured against. Although there will continue to be a number of inspectorates involved in inspecting and regulating local councils, they now have to work through the Audit Commission and the CAA process.
I apologise, because I should have made it clear in our views on Oftenant that we expect it to work within the CAA framework. In other words, Oftenant will be on a par with Ofsted, the Healthcare Commission and the Commission for Social Care Inspection, because its views on us and our performance will form part of our comprehensive area assessment and will not be a separate and additional form of regulation with the potential for intervention from outside.

Q 14

Nick Raynsford: That is precisely what is provided for in chapter 7 of part 2 of the Bill. There are very clear intervention powers
“where the registered provider has failed to meet a standard”;
“where the affairs of the registered provider have been mismanaged”;
and
“where the interests of tenants ... require protection”,
and so on. Those powers are extensive. If you are uncomfortable with those provisions, how can you possibly support the immediate application of them to local authorities, which I understood to be your position?

Sir Simon Milton:   It is, but if local authorities were to be incorporated from the outset, as we wish, those clauses would need to be reviewed to ensure that they dovetail with the form of regulation of local government that the national Government have decided upon. Clearly, those elements of Oftenant would need to be reviewed. There would need to be descriptive clauses to explain how Oftenant would dovetail with the other regulators through the CAA and to set out that it would not have additional powers.

Q 15

Nick Raynsford: Given your earlier concerns, which I share, about a two-tier outcome if we were immediately to proceed with the provisions relating to registered social landlords and were to introduce different powers applying to local authorities at a later date, how would you advise us to proceed? You are clearly uncomfortable with the provisions in the Bill relating to RSLs.

Sir Simon Milton:   We wish that the Bill had not been drafted in this way. There need to be amendments on intervention and where the duty of Oftenant would be merely to feed into the commission and the CAA. I am afraid that the matter requires further thought and further drafting, but there is time for that to happen during the passage of the Bill. The LGA will propose some suggestions to the Committee and the Government.

Q 16

Nick Raynsford: May I turn to Mr. Day? I refer to your evidence, which seeks to give
“local authorities the power to serve notices on RSLs that are performing poorly in their area, and require that RSLs respond to the local authority.”
Do you seek those powers?

Nick Day:   On reflection, we may not have expressed that point in the best possible way in our evidence. I return to the fact that there are obviously many occasions and examples of excellent working relationships between local authorities and RSLs, and I certainly echo the comments that we do not want big regulation or lots of draconian interventions. However, we are concerned about circumstances in which the relationships between local authorities and RSLs are not so good. There are issues in London with many RSLs having stock in various different boroughs, which can involve quite small numbers. There can be up to 80 RSLs operating in one borough, many of which will have a stock of perhaps 10. The question is how to take a strategic response to local needs in those circumstances.
While the Local Government and Public Involvement in Health Act 2007 was progressing through Parliament, we put through an amendment that was not taken up. It was about putting RSLs on the same platform as the partner authorities in the 2007 Act; if a notice were served by a local authority for them to come to an overview and scrutiny committee, they would have to respond. That would be a way of trying to engage RSLs locally, where the relationship may not be working so well.
So, in our draft, which I feel may not have been very well put together, there is a desire for some form of leverage that local authorities can use with RSLs. Local authorities had a lever in the former arrangements for the financial allocation of resources, which has been lost. We need to think about how we can ensure that local priorities are recognised and that there is engagement.
I have since picked up in the Bill that RSLs have a duty to co-operate, if they are asked to help in the development or modification of a sustainable community strategy. The question then is what about the next stage, which is implementation. There are things there that we may seek to strengthen in the local authority’s role.

Q 17

Nick Raynsford: I am pleased to hear that answer, because your written submission to us did not seem at all compatible with the approach in the Cave review, which has led to the proposed regulator. The review makes it clear that Cave does not envisage placing
“local authorities in either a regulatory or a super-ordinate role in relation to social housing providers”.
So I am pleased to hear that you are backing away from what appeared to be an inconsistent demand.
If you are seeking this greater power of involvement, which I understand, how do you avoid a complete nightmare in the scenario that you have described in which there may be a large number of registered social landlords in any one local authority area—in London and other parts of the country—and, indeed, where RSLs will operate in a number of different local authority areas? How will you get consistency and avoid RSLs being pushed in one direction by one authority and in a completely different direction by another next door?

Nick Day:   One would not start from here, if one had the opportunity not to, but we are where we are. We are engaged in some work with the Housing Corporation and the London Housing Federation, which has been very helpful, looking at sets of performance indicators that should perhaps be available to local authorities across the piece, as Professor Cave proposed, and rationalising the RSL arrangements. Ownership is one way of doing that, but it is quite complex. We are also examining some innovative methods, involving transferring management arrangements and leases, so that we can get a more consistent approach to meeting the local standards that are needed. My response is that work is happening outside the Bill to address that problem, but we are trying to strengthen measures in the Bill, too.

Sir Simon Milton:   There is always a danger when you have a London MP quizzing two London-based representatives that we forget the rest of the country, but the truth is that there are problems on the ground today. There is lots of pepper potting of housing association property in and among local council housing stock. What you get on the ground is complaints from tenants of housing associations. There may be antisocial behaviour issues and you will get a range of antisocial behaviour policies between different RSLs and different local authorities.
Your question was, “What does a housing association do when councils have different policies?” I am afraid that the answer is, “Get over it,” because we are expecting councils to have a place-shaping role, which means taking a view on antisocial behaviour in its area and trying to corral all the different partners and stakeholders, including RSLs. Those bodies may have different strategies, and I am afraid that RSLs will have to either learn how to cope with that or look at their own stock and decide, “Actually, it’s not terribly sensible to have small numbers of units dotted here, there and everywhere.”

Nick Day:   I have a few more examples of issues where perhaps we could think more about the local authority’s role. Local authorities are not one of the bodies that the regulator has to consult over the disposal of stock. We are very keen to ensure that, as Professor Cave suggested, performance information is available at a local authority level. I am sorry if this is a rather technical point, but if you have a RSL that has its stock across a number of local authorities, it may perform well in general, but if you feel that there is an issue in one particular area, for example with decent homes, you would want to be able to take into consideration the performance of that RSL in that local authority area. At the moment, that information is not always available. Unfortunately, due to the way in which the CAA’s set of 198 performance indicators is set out, the two specific housing performance indicators—decent homes and tenant satisfaction—apply only to councils and not to RSLs. We are very keen to see that changed.
There are other examples of situations where I think that local authorities do not have such a strong role. When it comes to deciding when to intervene, the regulator should “have regard to” information from local authorities, and we might want to strengthen the wording there. Also, when it comes to enforcement action, there is a list of organisations that Oftenant should have regard to. Local authorities are the only organisations where there is a caveat, namely that it should be where Oftenant considers it relevant to do so. There are a number of areas where we would like local authorities to be recognised more strongly in the Bill.

Nick Raynsford: It seems to me—

Roger Gale: Order. I do not wish to curtail your line of questioning, Mr. Raynsford, but I have an indication from two other Members, one of whom is the Minister, that they want to come in on this area. I am afraid that we also have another area that we need to cover.

Lyn Brown: We will not need to cover the other area, because I will get it in here. I thought that that would be wise.

Roger Gale: Well, Mr. Holmes has another area that he wishes to cover.

Q 18

Lyn Brown: I was interested to hear your views about the regulation of the social rented sector. However, given that many councils, of necessity, are having to house their homeless community in the private rented sector and in temporary accommodation, I wonder whether you think there is scope for greater regulation in the private sector. If so, do you think that that is possibly an omission in the Bill?

Sir Simon Milton:   When you are examining regulation, you need to take into account lots of different issues and not just the tenants’ perspective, although clearly that ought to be the most important issue. The private rented sector operates in a market and, as with any market, regulation has an impact on the way that market operates and on what becomes available and not available. I would be keen to find ways in which we can improve the situation for tenants of all forms of social housing, yet avoid unintended consequences. I fear that the private sector market is different from the public sector market.
Just as we need to be cognisant of the views of lenders who are funding RSLs, so we need to be cognisant of the views of lenders and have a private sector that works from a financial point of view and not end up with units withdrawn from the rented market because we have unintended consequences from the way we have regulated them. I would be surprised if you could find a single regime that would work equally effectively and without negative impacts across private, RSL and council stock. If that could be done, clearly there would be benefits in being able to compare and contrast.

Q 19

Lyn Brown: I would love to spend some time talking to you about the impact of the letting market on house prices in London and whether the market is artificially inflating prices because it is possible to place people in such appalling accommodation in many cases, but I am not sure that I will get the time to do that. Can I talk to you about what Shelter described in its briefing before the Bill was published? It talked about extending regulation from just a three-storey home to homes containing five or more people, which would give local councils greater authority and powers to regulate overcrowding in the private rented sector. Could you see that having benefit, given that you want to avoid inflicting unintended consequences on the private rented sector?

Sir Simon Milton:   We do have powers as local authorities to regulate houses in multiple occupation—

Lyn Brown: You do not.

Sir Simon Milton:   Well, we do. You may feel that we are not effective, but we spend a great deal of money inspecting HMOs for environmental health. That is a different regime, admittedly. It looks at different issues and it looks at health and safety first of all. If you are talking about London, frankly we have an even bigger problem with overcrowding in the public rented sector. Ultimately, this is all about overcrowding as a function of there not being enough stock, so we all come back to the same point—how do you increase the quantity of stock?—which then has impacts on things like overcrowding.

Q 20

Lyn Brown: I understand the regulation for HMOs. You can only really be effective if you are looking at three-storey accommodation and not two-storey accommodation. The idea was to change the regulation from being about the building to being about the numbers of people and giving greater powers to your environmental health teams to ensure that Rackman-type landlords were not screwing the economy for every penny that they could get while failing to provide the people whom they were housing a service that they could live comfortably with.

Roger Gale: Before you respond, could I bring in the Minister and then ask you to respond to both questions?

Q 21

Iain Wright: Forgive me, Sir Simon, but I am confused by the points that you made earlier to my right hon. Friend the Member for Greenwich and Woolwich. My understanding comes from the LGA’s briefing to us on Second Reading which states:
“We support the creation of Oftenant to promote better performance and tenant focus across all types of social landlords. Council landlords are willing to accept the same responsibilities and scrutiny as other providers.”
Given that, but also given what you have said in evidence today, could you just reaffirm that that is the LGA’s view? Is it possible for me to infer that you believe that the regulatory regime proposed in the Bill with regard to Oftenant is more focused, more appropriate, has a lighter touch and is more risk-based than councils and ALMOs have to deal with in the current regulatory regime?

Sir Simon Milton:   Yes, the LGA position is that we wish to see a common form of regulation. I agree with your characterisation of the changes that you seek to make. My point to Mr. Raynsford was that if local authorities are to be included, as we have asked, that would need to be amended to fit with the CAA process, which in our view trumps the Oftenant powers. As set out for housing associations, they could not operate in the same way as local authorities, but only in the aspects of intervention.
Going back to Lyn Brown’s comments, I had misunderstood your point, for which I apologise. For the public good, we would welcome that as we certainly want to be able to deal with conditions of overcrowding and not to be constrained by the fact that the regulations related to building structures rather than people. This is particularly important; we are facing a significant problem in local authorities in many parts of the country as a result of an influx of migrant workers who are often housed in inadequate conditions. Councils are struggling to make an impact in that respect.

Roger Gale: Again, I apologise for truncating the discussion. Mr. Holmes.

Q 22

Paul Holmes: About half of local authorities have transferred stock to RSLs and about half still provide council housing—140 directly managed and roughly 60 ALMOs. Clause 269 talks about giving the Secretary of State power to consider how the housing revenue account works so that perhaps after 2010-11 at the earliest councils will be able to retain the rent and the right to buy. Have you any thoughts on that process?

Sir Simon Milton:   We strongly welcome that direction of travel. We do not underestimate the complexity of achieving it, but there is a widespread view within local government that we want the housing revenue account to be localised and owned by the local authority and to reflect more the local housing markets rather than being a form of national, centralised redistribution, which is what it currently is.

Q 23

Robert Syms: Picking up what you are saying, essentially we have a pool for the national rent of which something like £120 million comes out of two thirds of authorities and is redistributed mainly into London, I have to say, and to some northern cities. Are you saying that the LGA’s view is that you prefer money raised from tenants locally to remain locally for the provision of housing within each area?

Sir Simon Milton:   Yes, that is what we are saying. In order for that to happen you would have to disaggregate; there would need to be a one-off settlement, which would mean that some people had to be paid and some would have to contribute in order then to have a stable system going forward. We believe that the Government are looking at that and we would certainly encourage them to do so.

Nick Day:   I echo support for the provision around taking properties out of the HRA. Obviously, the complexities lie around what happens to the properties that remain either within that local authority in its HRA or in other authorities that have not transferred properties. Considering those implications as well as some wider implications around local authorities’ “place-shaping” role might have an impact too, and we are looking at that.

Q 24

Paul Holmes: Where stock has been transferred to RSLs, they can keep the rents and 75 per cent. of the right to buy and the overhanging debt is written off at transfer. The suggestion from the six pilots that the Government have been looking at is that councils that still manage stock will have to buy out the overhanging debt. The impact assessment for the Bill says that that is not viable; the amount that they would have to borrow to buy out the debt would mean that they still did not have any money to invest in housing, to build new housing. Have you any thoughts about the terms on which the change to HRA should take place?

Sir Simon Milton:   No, I am afraid we do not. We recognise that there are complexities and that there is a lot of detail, but as a direction of travel we believe that it is the correct one and we would need to work out how to overcome the difficulties that some authorities would find themselves in.

Roger Gale: Thank you. By dint of some heavy-handed regulation rather than a light touch, we have got to where we are now and it is coming up to 11.45 am. Sir Simon and Mr. Day, I thank you very much indeed for joining us this morning. I believe that the Hansard report of this sitting will be available within a couple of days.
A number of questions were asked, not least by Lyn Brown, and I am afraid that I had to curtail that conversation. If, in the light of reading Hansard, you wish to make further comments, the Committee will be pleased to receive written evidence from you.

Sitting suspended.

On resuming—

Roger Gale: Order. May I welcome the representatives of the Chartered Institute of Housing? For the benefit of the Official Report, I ask you both to identify yourselves.

Sarah Webb:   Good morning, I am Sarah Webb, chief executive designate of the Chartered Institute of Housing.

Richard Capie:   My name is Richard Capie and I am the director of policy and practice of the Chartered Institute of Housing.

Roger Gale: I want to put it on record that I did not make it clear—it is my fault and nobody else’s—at the start of the previous witness session that hon. Members are required to declare interests. If there is any challenge about that, I will take full responsibility. I misunderstood what the Committee wanted to do, which was that as hon. Members spoke for the first time, they would declare their interests. I invite hon. Members as and when they next speak to declare an interest if they have one. As I said, I take full responsibility for their not being declared from the outset.

Alistair Burt: May I take this opportunity to apologise for not being present at the start of the sitting; I was speaking to the Local Government Association finance conference. As I missed the preliminaries, may I ask whether you have already allocated lines of questioning? I have two areas that I want to raise. How would you like me to appeal to you with those?

Roger Gale: We have agreed a broad line of questioning, but I have made it absolutely clear—thank you for the opportunity to restate this—that any hon. Member may catch my eye and intervene at any point. The first two lines of questioning have been laid down, the first of which is designed to give the Chartered Institute of Housing the opportunity to make a brief opening statement, after which it will be open season for all hon. Members.

Q 25

Lyn Brown: My job was to give you the soft ball. In one of the statements that you made to us, you stated:
“We need to grasp this opportunity and make a real difference to residents and tenants.”
Does the Bill do that? Which bits of it do you like and which do you not like?

Sarah Webb:   The short answer is that the Bill has the potential to do that. We could make sure that it does so a bit more and I will come back to that. From the very start of this process, we have been supportive of the concept of a national housing agency, now called the Homes and Communities Agency, and of a regulator that is based on customers. The agency has the potential to create a step change in housing supply, which we need, and which will have an impact on customers. Similarly, the regulator has the major benefit of orientating our sector towards customers and less towards providers; more towards outcomes and less towards processes. In general, we are very supportive of the Bill.
I have a list of things that we would like to comment on. Would you like me to go through all of them and you can stop me when you have heard enough?

Roger Gale: You have been given the Floor and the opportunity to say something. If you wish to say it, take your chance now.

Sarah Webb:   I will absolutely do that. In relation to the HCA, the most important thing that we are concerned about is the suggestion that in selling land, the new agency should be required to get best consideration. That is something that happens at the moment, and it makes public sector organisations compete for and drive up the value of land, which is of no benefit to any of us. We urge a change on that. We have some suggested words, such as “best outcome” or “greatest public benefit”, which do not require the best financial consideration to be achieved. We also do not believe that that should be referred back to the Secretary of State.
On a related point, we see the Bill as a useful opportunity to redefine the term “social housing”. It might seem a bit pedantic, but we are facing considerable residualisation of social housing as a concept, and there is a lot of stigma attached to people who live in social housing. This would be a brilliant opportunity to ditch the term once and for all, an idea which everyone in the sector supports. As it is defined at the moment, social housing refers to people who cannot afford a market solution. While we have been reassured by officials from the Department for Communities and Local Government that they do not mean to make social housing available only for the absolute poorest, there is the potential, as the Bill is currently worded, for that to be the case.

Richard Capie:   With regard to clause 68, which I am sure you will have seen the publicity about, the concern is not how it might be used now, but that it could be used for different purposes in the future.

Roger Gale: Order. Mr. Capie, I am desperately sorry, but the acoustics in this room are not as good as the many millions of pounds that were spent on it suggest that they ought to be, so I ask you to speak up just a little.

Richard Capie:   In relation to clause 68(c), our concern is not about how the clause is intended to be used at this moment in time, but how it could be misused in the future against many of the principles that John Hills set out in his work, which would effectively lead to the further residualisation of social housing.

Sarah Webb:   For us, the most fundamental point about the whole Bill relates to regulation. We are a unique organisation in that we represent people from across the whole housing sector—we do not represent social housing, but within social housing, we have members who are in housing associations, arm’s length management organisations, local authorities and also the voluntary and private sectors. I have never known as much consensus as that which exists around the idea that Martin Cave was absolutely right to head for what was called domain regulation, which from a customer perspective relates to whether you are a tenant of a housing association, a local authority or an arm’s length management organisation—we will park the issue of the private sector for a moment. Certainly, in relation to the different types of social landlord, you should have the same protection.
The Bill does not deliver domain regulation. We have been talking to the DCLG about how it might do that, and we understand that its intention is that it should. The DCLG has said that it wants to set up a review to bring in local authorities. You have previously heard from the LGA, with which we have been working and which we support. Everyone I know is supportive of the attempt to try to get domain regulation from the word go.

Q 26

Lyn Brown: You have said that we could go back to the issue of the private sector. When a council needs to place someone in the private sector because there are only a number of places available, do you think that there is any case that in such circumstances there should be domain regulation protection for the tenant?

Sarah Webb:   I would argue with that. In principle, some of the most vulnerable tenants in the country are the tenants of private landlords. Our view is that the Bill is such an important prize that we would not do anything that would undermine its going through, because we want to see what it proposes happen. Theoretically, however, we should be aiming for protection for tenants of private landlords as well. Certainly, what you have suggested could be a halfway house to that, but the need for domain regulation is fundamental from a tenant protection perspective.

Q 27

Alistair Burt: I have two questions. First, the Government’s record on the delivery of housing has not been particularly good. What do you think have been the main factors holding that back and why should the merger of English Partnerships and the Housing Corporation make a significant difference to those problems? Secondly, there has been, not unnaturally, a concentration on urban housing. Will you say a little about how the Bill will have an impact on the problems of affordable rural housing?

Sarah Webb:   Can I clarify that you were talking about the delivery of new social housing, when you said that the Government have not got a good track record?

Q 28

Alistair Burt: In general, but particularly social housing, yes.

Richard Capie:   I hope that this is not about the merger of English Partnerships and the Housing Corporation—it is about the creation of a new agency. It may be building on the, in some instances, strong foundations of those agencies, but it is certainly about achieving more than the sum of their parts. We are also looking at stripping out some of the delivery functions contained in the DCLG and moving it towards being a much more strategic, policy-focused Department, as well as one that has had some direct delivery responsibilities in the past. Bringing those functions across, as well as bringing the responsibilities of the Academy for Sustainable Communities into the new agency, will not be a sufficient starting point, because it is not just about gluing different pieces of a jigsaw together.
We found it quite encouraging that the Bill goes back to first principles and says, “What do we actually need in order to deliver on the ambitions not only in the housing Green Paper, but looking ahead? What are the powers that our new agency would need, perhaps learning from some of the mistakes that we have seen in the past?” That is encouraging. The challenges to do with supply are only part of the equation. We are delighted to see that the Planning Bill is also being considered by this Parliament. We know that the delivery of our ambitions for homes in both market and social housing will be contingent on good quality planning and also on land supply. There are some big issues around that.
We also want to mention the critical role of the Government in local authority strategic housing in particular, which we have been pushing hard on for some time. The key considerations include not only how the HCA operates, but how it interfaces through the tasking framework with both the regional architecture, as it was set out in the sub-national review, and local government.

Q 29

Alistair Burt: Do you think that the Bill needs to take powers away from local authorities’ planning authorities? Is that a necessary power?

Richard Capie:   I think that it is a power that we would like to see executed with caution, if it were executed. It is certainly not the first point of recourse. Obviously, where local authorities are capable and enabled to execute their planning powers to the fullest extent, that should be the proper avenue. However, we are also talking about situations where complex land arrangements might cross local authority boundaries, in which case it might be advisable or desirable to vest the planning powers in the actual agency in order to expedite the supply needed. We have been clear that we see the local authority role as absolutely critical in that, and that it should only happen where absolutely necessary.

Sarah Webb:   We would like the wording to be amended, so that the default position is with the local authority, assuming that it is an effective strategic enabler, whether at the local authority level or the sub-national level. One of the reasons that we have had failure of supply, as you have indicated, is where that has not happened. Actually, the new agency’s power to step in is quite important. However, it should step in not as a default, but only if a local authority has not exercised its rights first.

Q 30

Iain Wright: I have two questions. One leads on from what we have been discussing on the role of the agency. I am very interested in the relationship between the agency and the local authorities, and I understand your point about the default setting. However, your briefing on Second Reading states:
“in the CIH response to the consultation on housing and regeneration, CIH asked the Government for the new agency’s remit to go beyond housing delivery and to cover sustainable communities. CIH considers that the Bill does not go far enough in this respect and the HCA should have a much clearer duty to ensure communities are sustainable and cohesive.”
Will you expand on that and indicate the broad parameters?

Sarah Webb:   We have been concerned for a while about the local authorities’ strategic enabling role, in general, in relation to housing and to sustainable communities. It has been undermined for a variety of reasons over the past seven or eight years, but we think that it is key to delivering not only new supply, but the place-shaping role we have discussed. It is only really the local authority that can take on that role and responsibility on behalf of the community.
While the debate about the new agency has been going on for the last couple of years, things have happened at the Audit Commission. We have been supportive of the concept of the comprehensive area assessment, but the problem is that we are not sure what it looks like yet. Originally, the CAA was not an option, so we were looking for the new agency to provide a clear role for local authority strategy. Since the inception of the CAA, we think that it is the best place for that role, but we are not sure whether it will be used. Whether or not it could be put in the Bill, there is an argument for local authorities being required by law to produce a housing strategy or something that links with it, because that is the only way to ensure that sustainable communities are delivered and that the best use is made of the resources of all the individual organisations that put money into an area. The local authorities will have a “conductor of an orchestra” role, but it will not happen without, ideally, legislative underpinning.

Richard Capie:   There are two elements of the legislation that we find encouraging. One is tucked away at the back of the schedules: it is an amendment to the Local Government and Public Involvement in Health Act 2007, which names the Homes and Communities Agency as a partner authority under that Act. It is a very encouraging step and something that we are pleased to see. Secondly, objective 6 of the regulator’s objectives talks about the contribution that social landlords will be expected to make to non-housing activity. Again, we see that as an important component in stressing the contribution that can be made to sustainable communities. We have been encouraged by both those provisions.

Q 31

Lyn Brown: I was interested to hear you talk about sustainable communities, mixed communities and “place shaping”, an approach I totally agree with. Do you think it possible to plan for a mixed-tenure community and, at the end of the day, not to get it because of market forces?

Sarah Webb:   That is interesting. It is possible to want to plan for it, but not to use the powers to ensure that it delivers. The most likely reason in my experience for anticipating that you will have a mixed community but not getting one is because, crudely, you give in to the developers who say, “I don’t want any social housing in this scheme,” or, “I only want two houses at the back of the estate that look completely different.”

Q 32

Lyn Brown: In my community, we have a huge buy-to-let market, so when one is building new private sector homes, one is not necessarily providing for owner-occupation but possibly providing for further rented accommodation in a high rent area, which may well mean that people are not able to work and to pay rent for the roof over their heads. Thus, when you add that to the social rented housing in an area, what you actually have is a community that is not mixed, because owner-occupation is either not there or is reducing.

Sarah Webb:   I agree with that. I live in Sandwell in the west midlands, and Sandwell does not need any more social rented housing, as it has an excess of it. My very crude approach is that if we know nationally that 75 per cent. of people own and that 25 per cent. rent, which is roughly the proportion and has been for a while, we should start off with every estate having roughly that proportion, but very few do so. Most of them are skewed one way or the other, and it is as important to unskew the social rented sector as the owner-occupier sector. Buy-to-let is another area that I could rant about for ages.

Q 33

Lyn Brown: Do you have any ideas about how one might find a remedy for that situation? Do you think that it could be placed within this Bill?

Sarah Webb:   We originally called for a public service agreement target on mixed communities. I understand why there was no appetite for it. If everyone had their way and added their own personal desire for a PSA target, there would be hundreds of them and they would be unachievable. The lack of mix, whether it is all owner-occupation or all social housing, is so important to me—if I had to pick one thing from the Hills review, it would be the lack of mix. I feel that for a moment in time we need some national targets about mix or for local authorities, through their strategic enabling role, to be much harder about delivering it.

Q 34

Andrew George: First, I apologise for my earlier absence, Mr. Gale, but I am also sitting on a Select Committee this morning. Secondly, I want to declare an interest as a founder member 21 years ago and a current board member of the Cornwall for Rural Housing Association, for which I have no pecuniary interest.
Will you expand more on your opening remarks, with particular regard to seeking the best social outcome for publicly owned land? How do you intend to get the best outcome, as you described it, when a public authority is selling land? That is a continual challenge for many public authorities, because a social outcome has no financial value attached to it. Do you intent to attach a value to it?

Sarah Webb:   I will start with a generality and Richard can come in with the specifics. It seems crazy to me, in an environment in which there is never enough public money to go round and there is an affordable housing crisis, that one bit of the public sector is competing with another bit of the public sector. You can have two housing associations competing among themselves and with Wimpey or Barratt Homes to buy a bit of land owned by a local authority. All that does is drive the value of the land up. It reduces the ability of the housing association, if it wins, to produce affordable housing for rent. Housing associations need more grants, which involves public money. I start from the perspective that that is part of my definition of insanity.

Richard Capie:   We all welcome the Government’s initiative to go across Whitehall and ask every Department to identify surplus public land. That is very helpful, because we know that we need more public land to build on. Having identified that land, the question is how that land is disposed of. We see evidence across Whitehall of Departments wanting to maximise the return on their assets. That means that somebody else ends up paying more for that land when they acquire it, so one part of Government is paying for another.
Another example is how English Partnerships has been required to obtain best consideration and circumstances around its land supply. That has meant that the Housing Corporation has ended up paying more grants from one part of the public purse to subsidise the homes that are built on that piece of land. We have an opportunity with this Bill, in bringing different agencies together, not only to operate in a different way, but to consider new investment frameworks in which the state can look at investments rather than grants and see a return on its investments over a period of time. I hope that that will have an influence on how you consider how to use land going forward.
I will make one comment on what Lyn Brown said about mixed communities. Another thing to bear in mind is that local authorities have considerable powers under their planning powers and the local development frameworks to specify what kind of homes they want to see, and considerable work is going through on that already. A lot of powers can be used to influence local housing markets in terms of what is being built. There is also the ability for landlords to look at estate management, covenants and arrangements.
You might build a mixed community in the first instance, with 25 per cent. social rent, 25 per cent. low-cost home ownership and 50 per cent. outright sale, and then find that the outright sale goes into a buy-to-let market and that some of that gets let back to the local authority. You can find ways around that, and there are some good examples of where it has been done. The powers exist, but there needs to be awareness and knowledge about what they are and how they can be applied sensibly.

Q 35

Nick Hurd: On sustainable communities, it was my privilege to take the Sustainable Communities Act 2007 through Parliament as a private Member’s Bill, with Government support. Its whole premise is that when it comes to shaping the future of communities, local communities and the authorities that represent them know best. Do you have any concern that the HCA, with its big powers, will risk running into conflict with that localist agenda? Do you believe that adequate safeguards are in place to ensure that local authorities have the powers that they deserve?

Sarah Webb:   Broadly, yes. As Richard mentioned, buried away there is a duty to co-operate with the local authority. I guess that not all communities are actively engaged with their local authority. There is a risk that you are assuming that the local authority will be engaged with all the individual estates or areas within it. I think that right now we need a national housing agency. We have a national housing problem. We have a lack of affordable housing and we still have not made all the existing housing decent. Never mind standards in the private rented sector, homelessness or CO2 emissions from existing housing, there are a load of really big agendas that we need a national housing agency to tackle. In particular, we need an agency that can bring all those different elements together so that different policies do not conflict with one another.
The national tenants’ voice will be an important component. That is happening separately. There are some announcements today about that. We debated internally whether we thought that it was sensible to require the national tenants’ voice to be listened to in some way and we decided that that was probably not what we needed. It is going to exist. It is going to represent tenants. That is going to be very important.

Q 36

Angela Smith: You talked earlier about the role of local authorities as strategic enablers of mixed sustainable communities and also, let us face it, as the deliverer of the extra housing that we know we all need. How effective do you think that the housing needs assessment can be as a planning tool in delivering these mixed sustainable communities, given that local authorities will have to work with other local authorities, with the HCA—which will have an overarching role—with housing associations and with developers to plan the housing needs?

Sarah Webb:   We have debated whether we should suggest that it was a requirement of the HCA to produce an annual assessment of housing need. There is not such a thing at the moment. The new National Housing and Planning Advice Unit looks only at market housing, not at housing across the board. So there is not an annual definition of housing need, therefore it ends up being done at local authority level. That is not necessarily wrong, but a number of them do not stand up to planning challenge which is a really big problem.
When we were discussing the concept of the NHPAU, I hoped that one of its roles would be to provide definitive guidance on how to carry out those assessments so that they did not get challenged by private developers. We have reined back from that and I am not altogether sure that I understand why. The answer—sorry that it is long- winded—is that it has the potential to be fundamental, but we have not quite got it right yet. We have turned it into a bit of an industry for consultants and experts, which can still result in its being challenged at the local level. It can take three years to get a scheme up and running.

Q 37

Angela Smith: Would you recommend the production of definitive guidance at a national level as one of the outcomes of this parliamentary process?

Sarah Webb:   It has been tried.

Richard Capie:   We would all welcome stronger guidance and support for local authorities. That goes back to what the strategic housing role is about. It is about local authorities’ capacity to deliver some of these things. That is a big issue. We are encouraged by the announcements in the sub-national review about how the regional architecture will work. That goes back to Mr. Hurd’s comments about sustainability and how the agencies may interface with different local authorities. I think that we will see a very graduated approach, in which you have strong local authorities that are capable of doing good-quality needs assessments and market assessments and may have very capable planners. The agency’s role with them could be quite different from one in which it is much weaker. It may have a much stronger hands-on role and be able to support the capacity of that authority.
Similarly, we are increasingly seeing authorities clustering together and making the most of different resources across local authority boundaries and operating at the sub-regional level, at which many of these assessments make a lot more sense, such as travel-to-work areas and cultural and leisure footprints. Housing markets do not necessarily sit comfortably within local authority boundaries. Increasingly, we are seeing really welcome co-operation among local authorities in that area.

Sarah Webb:   If I had to pick one thing that would make a real difference, it is not on the methodology for addressing housing needs; it is that local authority housing and planning people should say the same thing. We worked with the Royal Town Planning Institute on a planning for housing document, but it is still possible to find situations in which a much-needed scheme for affordable housing, which has been supported by the housing department and received a grant, perhaps through a housing association and the Housing Corporation, is refused by planning. That is probably the bigger difference. If we could require planning for housing strategies, whether at the local level, the sub-regional level or whatever level, that would be very helpful.

Q 38

Angela Smith: I support that entirely, given that I live in a city where there are swathes of local authority housing and very little sign of market investment. On the other hand, parts of the city are almost exclusively filled with market housing and increasingly there is the encroachment of what we call the university set into that housing, which pushes up prices, bound with infill development rather than strategic planning for housing need. I think that that is in danger of producing an incredibly difficult housing market in the coming years, which is where London is now, of course.

Sarah Webb:   In our submission to the spending review, we suggested that there should be some additional money for the strategic role of local authorities in relation to housing. We have just been doing some work for the International Development Association—[Interruption.] I do not know if that device is mine.

Roger Gale: Order. I ask that all electronic devices—I mean all electronic devices—are switched off. That is what that noise on the acoustic system is.

Sarah Webb:   We have just done some work for the IDA on the capacity of local authorities to deliver their strategic enabling role. I am not at all proud, as the representative of the sector, to say that that work produced some very damning results. I understand why that happened, but so fundamental is that strategic role to delivering all the things that we aspire to deliver that we need greater capacity. That is not an issue for this Bill. That strategic role was not supported as part of the comprehensive spending review 2007. It is difficult to see how it will be reborn without some additional funds.
For me, where the value of the national agency comes in is that, although in relation to regulation it talks about setting standards as a landlord, we also need some guidance on what it means to be an effective local authority strategic enabler. I say that because it is possible at the moment to refuse to have any affordable housing in your area, because you do not want social rented or low income tenants there. I think that the national housing agency needs to be able to come in and say, “Hang on a second, that is not right”.

Roger Gale: Order. I am conscious of the fact that this evidence session has to end at 12.30 pm under the terms of the sittings motion, so we must now move on.

Nick Raynsford: I declare interests, as chairman of the Construction Industry Council, the National Housebuilding Council Foundation and the National Centre for Excellence in Housing; as a non-executive director of Hometrack; as an honorary fellow of the Royal Town Planning Institute and of the Royal Institute of British Architects; as vice-president of the Town and Country Planning Association, and as a member of the Notting Hill Housing Group. Sorry about that rather long list.

Alistair Burt: Can we take that as read in the future?

Q 39

Nick Raynsford: I am following the Chairman’s ruling.
Can we pick up your twice or thrice repeated support for the creation of a national housing agency—the HCA? To quote your own words, it would be an agency
“with the potential to create a step change in housing supply”.
Do you believe that the Bill, as it is currently formulated, gives the necessary powers to the HCA to achieve that, or are there any areas where you feel that additional powers should be granted or where powers should be transferred from the Department for Communities and Local Government to the HCA in order to achieve that objective?

Sarah Webb:   Yes, I think that the powers are broadly there in the Bill to deliver that objective, in particular the planning power that we have just discussed, which could be seen as riding roughshod over local communities, but that is an important step change. I do not think that the best consideration supports that agenda, because affordable land supply is fundamental to its ability to deliver a step change. That is why we focused on that one.

Q 40

Nick Raynsford: You will be conscious that the National Audit Office and the Public Accounts Committee have expressed concern about delivery by the DCLG in certain areas, most recently Thames Gateway. I understand that the director of Thames Gateway has recently resigned. Do you think that it is right that Thames Gateway is not defined as within the responsibility of the HCA?

Richard Capie:   Lots of delivery functions are contained within the DCLG. I suppose that our key consideration would be what the core function of the Department should be. The thing that we look for from DCLG is incredibly strong leadership and policy direction. On the delivery of particular pieces of work, Ministers have the decision on how best they can be delivered, but it seems a little odd that we have a dedicated delivery agency that is being set up with considerable powers, yet some of the direct delivery functions are being retained.

Sarah Webb:   When we originally wrote about the potential new agency way back two years ago, our clear line was that everything should be in it—the existing neighbourhood renewal unit should be part of it, Thames Gateway should be part of it; in fact all the growth areas, because I think at the start the growth areas and the pathfinders were not going to be in it. It seems to us that that is a missed opportunity. There is no point in setting up an agency with these powers if it does not take a proper, national view of things. We thought that the absolute best thing about it was that it would encourage DCLG to be strategic, not having to sign off endless disposals about individuals grant, bits of lands and all the other things that the Secretary of State does.

Q 41

Nick Raynsford: You seem to be getting there in the end, because if the largest single area of growth in the country, with the greatest potential for new house building, is not included in the remit of the agency, it might not be able to deliver.

Sarah Webb:   Yes, but we would say that there are still some things in the Bill that require Secretary of State approval that we do not think need it. The DCLG had the opportunity to create itself as a strategic body and have the HCA deliver, and that would be a better combination.

Richard Capie:   On the Thames Gateway, we are all concerned that the growth that is planned for that area is delivered as effectively as possible. Whether it is outside the HCA or inside, it is ultimately not what we care about. If it is outside the HCA, there has to be a very strong relationship, though, between the HCA and the work going on in the Thames Gateway.

Q 42

Nick Raynsford: Turning briefly to regulation, you expressed a view that the new regulator being created in the Bill should scrutinise the strategic housing role of local authorities. That does not fit totally comfortably with some of the things that you have been saying about the HCA’s role in relation to local authorities’ strategic functions. Is there potential for a muddle here?

Sarah Webb:   To be honest, we have not quite worked out what would be the best way of ensuring that local authority strategy is delivered. I personally started off thinking that the new regulator would regulate housing, not social housing landlord services. If it was a regulator of housing, the local authority strategy would be an eminently sensible thing for it to regulate. Where we have ended up is that it is predominantly a regulator of social landlord functions, and therefore it does not fit neatly within that. We have ended up saying that there might be a legislative need to require local authorities to produce a housing strategy. That is not the same thing as the regulator then regulating that. It is a bit of semantics, but the way we have got the regulator in the Bill, we cannot see a way of fitting local authority strategy in.

Q 43

Nick Raynsford: You said earlier that there could be a situation in which a local authority failed to make adequate provision for social housing in its area. That would clearly be a failure of its strategic function. Who, then, should identify that failure and take action on it—the regulator, the HCA or who?

Sarah Webb:   That is the biggest issue, for me—that we do not have that clear. It is not clear to me that it could be fitted within the regulator role, although ideally that is where I would have started from. It is not anything like an HCA power at the moment, so it is missing. We have been thrashing this out, but I must be honest and say that I do not necessarily know what the right answer is. We do not even have the regulatory requirement to produce one, never mind to assess who is going to say whether it is good or bad when it has been done.

Richard Capie:   The key thing is that we would like to see a requirement on local authorities to produce good-quality and robust work on local authorities’ strategic role. The question is where would that best sit? It might be that it sits best within the local authority performance framework, or we could consider it in relation to the HCA and Oftenant. We know that it would be a good idea; it is a matter of figuring out how best it would fit in with the various levels of architecture that have been discussed.

Sarah Webb:   In recent history it has been assessed by Government offices.

Q 44

Nick Raynsford: Are you suggesting that that should be the model?

Sarah Webb:   No. The nearest equivalent would be the HCA, but clearly that is not in the Bill at the moment.

Richard Capie:   I reiterate the point that we should not get hung up on that. A key big chunk is missing from the Bill: local authority social housing regulation. For many years, we have been pushing for domain-based regulation and a level playing field for tenants. The fact that the Bill will not deliver that is our one big disappointment with it. We know that the Government have clear ambitions to go down that route and we are working with the DCLG, the LGA and others on that. However, we are concerned that we might have to relegislate for that in the future, when we have an opportunity here and now to do something about it and to secure that going forward, especially given the clear consensus in the sector on doing so.

Roger Gale: With four minutes of the session remaining, this seems an appropriate point at which to bring in the Minister.

Q 45

Iain Wright: Miss Webb, you spoke about thrashing things out and how there is a bit of a muddle at the moment over who does what. The Government’s role in the regulatory regime and direction of travel are very clear: we want to move to a single domain regulator within two years. However, you acknowledged the complexities in the comprehensive area assessment process and in local government performance frameworks. Given those complexities, is it right that we regulate for social housing tenants through RSLs and then move to a framework in two years, working with stakeholders such as yourself? Is that the right approach? From listening to you, I am convinced that it is. Do you agree, or should we have gone headlong into it?

Sarah Webb:   We would like—in fact, we did suggest to the Housing Minister that it was worth us all spending the next month working out whether we could involve local authorities in this process from the start. There might be the potential for doing that under this Bill. If that is the case, we should not miss the opportunity. As Richard said, we have been working very closely with the LGA at chief executive and chair level in order to consider ways in which that could be done. We are seeking guidance on what can be done. We understand the sensitivities involved with enabling clauses so wide that Secretaries of State could abuse them—perish the thought—but we would urge you not to give up on domain at this stage. Only if we all believe that it cannot be done should we move to plan B—the two or one-year commission looking at how to bring local authorities into the framework.

Richard Capie:   We were particularly encouraged by the LGA’s proposals, which set out what looks to be the start of a very workable solution. I do not think that we need two years to plan and map this out—certainly not in regard to the fundamentals of what can be done. If we set up a new regulator that, from the off, covers housing associations and new providers—probably in the same way as the Housing Corporation does already—we run the risk of missing a real opportunity to bring about a fundamental cultural change and to set up a new regulator that, from the word go, covers all social housing, with that embedded in its foundations and operation. We should also consider the perception in the rest of the sector that this has been set up in order to create a level playing field, and not with housing associations first and foremost and local authorities bolted on. We are trying to get away from that. It would be a grave missed opportunity not to consider how we might do that within this process.

Roger Gale: Thank you. Once again, we have been beaten by the clock. As I said to the previous witnesses, Hansard will be published within the next few days. If, when you read it, you wish to place other matters on the record, the Committee will be delighted to receive further evidence from you. Miss Webb and Mr. Capie, thank you very much for joining us. We are most grateful to you for your assistance.
One housekeeping issue before I wind up this sitting: we are on a learning curve and I made an observation this morning. I was asked earlier whether hon. Members should address each other in the traditional House of Commons fashion—as hon. Friends or hon. Members. However, this is a quasi-Select Committee. I noticed that Sir Simon Milton thought it necessary to refer to Members by name, and it strikes me that we are in danger of creating an artificial atmosphere for guests. That being so, I shall make a ruling now, which might become a precedent, that when I am in the Chair Members should refer to each other as they would in a Select Committee—in other words, by name. That will not apply when we move to full Standing Committee mode, when exchanges will be as is traditional.
Further consideration adjourned.—[Liz Blackman.]

Adjourned accordingly at twenty-nine minutes to One o’clock till this day at Four o’clock.